When applying for a secured loan, the amount you can borrow will generally be based on the equity you have in your property. For example, if you have a house worth £200,000 and a mortgage of £100,000, you would have £100,000 of equity. This means you could potentially borrow up to £100,000 with a secured loan. The interest rate on secured loans is typically lower than on unsecured loans, as the lender has the security of your property if you fail to repay the loan.
Unsecured loans
The amount you can borrow with an unsecured loan will depend on your credit score, income, and other factors. Lenders will assess your credit history to determine your credit score, and they will also look at your income and debts to calculate your debt-to-income ratio (DTI). The higher your credit score and lower your DTI, the more you will be able to borrow. With an unsecured loan, you can typically borrow up to £25,000, although some lenders may offer higher amounts. The interest rate on unsecured loans is typically higher than on secured loans.
Borrowing limits for specific types of loans
There are also borrowing limits for specific types of loans, such as student loans, personal loans, and credit cards. For example, the maximum amount you can borrow for a government-backed student loan is £9,250 per year, while the maximum amount you can borrow on a credit card is typically around £12,000.
